If you’re looking for some funding to cover a personal expense, you may be wondering if taking out a personal loan might be right for you. Personal loans differ from the more common mortgages, car loans and school loans, so it’s natural for people to be a little unfamiliar with them, but the experts here at Billy have you covered. Check out this helpful guide to understanding personal loans.
A personal loan is money provided by a lender that the borrower pays back over a period of time. Typically, these loans are for amounts ranging from $1000 to $100,000 with terms lasting between two and seven years. Like other forms of borrowing, it will affect your credit score, with on-time payments helping to build your credit and late ones damaging it.
Unlike other types of loans with heavy restrictions on what you can use the money for, personal loans can be used for almost any purpose you wish. Many people take them out when they are remodeling or repairing their homes. Others may use them for expenses such as medical bills, paying for a wedding or honeymoon, covering moving expenses or making a major purpose.
For some, personal loans are an option for consolidating debt and lowering monthly payments. If a person has several credit cards at high rates, for instance, they might take out a personal loan at a lower rate to cover the balances of those cards. Then, after those are paid off, the individual is left with a lower amount going out each month and only one payment to make instead of several.
Personal loans do not usually use collateral as other types do. Instead, lenders determine how much money and at what rate should be used for a personal loan based on a person’s creditworthiness. Factoring into that are things like your credit score, debt-to-income ratio and credit history, with your credit score being the number one factor.
Credit scores range from 300 to 850, with a score above 700 considered to be good. Several things are taken into account when your credit score is determined, including payment history, credit usage, variety of accounts and length of history.
If a person is unable to qualify for an unsecured loan, some lenders will offer secured loans or ask that you have someone co-sign the loan. While having someone with stronger credit can help you to get more money and a lower rate, that person will also be responsible should something happen and you are unable to make your loan payments.
Personal loan interest rates vary widely, with the lower end falling around 5% and the higher end falling at around 35%. Most loan rates fall somewhere between, though the average rate is around 10%. Before you decide to go with one lender, it’s important to shop around to see where you can receive the best rate. Personal loans can be an excellent means of bringing your vision to life. For more information on where to find the best experts to help your dreams come true, check out Billy.com's network of pros today. If you are working, we can help find you a payday loan lender.
When inquiring about a loan on this site, this is not a loan application. This is not an offer to lend. Upon the completion of your inquiry, we will work hard to match you with a lender or lenders who may assist you with an official.
When applying for a loan, lenders will commonly require you to provide a valid social security number and submit to a credit check. Consumers who do not have the minimum acceptable credit required by the lender are unlikely to be approved. Minimum credit ratings may vary according to lender and loan product. Any loan product that a lender may offer you will carry fees or costs including closing costs, origination points, and/or refinancing fees. In many instances, fees or costs can amount to several thousand dollars and can be due upon the origination of the loan product. This site is in no way affiliated with any news source or government organization and is not a government agency. Not affiliated with HUD, FHA, VA, FNMA or GNMA. This site may contain affiliate and partner links. If you are contacted by an advertiser within our network, your quoted rate may be higher, depending on your property, credit score, debt to Income and other factors that will be disclosed by the provider’s representative. We do not guarantee the rates offered by our providers are the best in the market, please shop around for the best solution for your needs.